False Marking Complaint Dismissed with Prejudice for Failing to Allege the False Marking of an Unpatented Article on a Website

10-1327

April 29, 2011

In Juniper Networks, Inc. v. Shipley, No. 10-1327 (Fed. Cir. Apr. 29, 2011), the Federal Circuit affirmed the district court’s dismissal of Juniper Networks, Inc.’s (“Juniper”) amended false marking complaint for failure to state a claim because the amended complaint did not reasonably allege the marking of an “unpatented article” within the meaning of 35 U.S.C. § 292.

Juniper asserted that Peter M. Shipley maintained a website for the hacker community since 1995 and developed software known as “Dynamic Firewall.” Shipley’s website allegedly contained information on current projects under development by people in the hacker scene in the San Francisco/Berkeley Bay area and their friends. In 1997, the Dynamic Firewall project included a “Patent Pending” notation on Shipley’s website. Shipley later received two patents, U.S. Patent Nos. 6,119,236 (“the ’236 patent”) and 6,304,975 (“the ’975 patent”). After each patent grant, Shipley’s website was modified to include the patent numbers next to the Dynamic Firewall project. The “Current Projects” also included the statement “Status: functioning” as part of the description for the Dynamic Firewall.

After the current owner of the ’236 and ’975 patents accused Juniper of infringement in a separate case, Juniper filed a separate case for false marking. Juniper alleged, based on information obtained via discovery in the infringement case, that Dynamic Firewall operated on Shipley’s home network beginning in 1996 and as a component of his website. Juniper further alleged that Dynamic Firewall was destroyed in 1999 due to a hard drive crash and that Shipley had not re-created the prototype or produced another product embodying the invention.

After learning that the only embodiment of Dynamic Firewall was destroyed in 1999, Juniper brought suit accusing Shipley of false marking under 35 U.S.C. § 292. The district court dismissed Juniper’s original complaint with leave to amend. In its amended complaint, Juniper alleged that Shipley falsely marked “the Website and any firewall or other security products or services operating thereon, as well as web pages generated by the Website.” Slip op. at 9 (citation omitted). Juniper did not allege that the Dynamic Firewall software itself was falsely marked. The district court again dismissed the complaint for failure to state a claim, this time without leave to amend, after finding that Juniper had not pled facts showing that Shipley marked an “unpatented article.” Juniper appealed.

The Federal Court held that Juniper’s amended complaint did not state facts showing that an “unpatented article” was marked upon, affixed with a label, or advertised in a manner importing that it is patented as is required to state a claim under § 292. Further, any such claim would have likely been time barred under 28 U.S.C. § 2462 and in conflict with the Court’s precedent requiring that a mismarked article must actually exist.

First, the Federal Circuit found that “[b]ecause the [ ] policy concerns [justifying § 292] apply equally to websites as to traditional articles of manufacture or design, and because websites may both embody intellectual property and contain identifying markings, . . . websites can qualify as unpatented articles within the scope of § 292.” Id. Second, the Court rejected Juniper’s assertions that the statements on the website, including a statement that the “status” was “functioning,” implied that Dynamic Firewall was working to protect the website. Further, nothing on the website reasonably suggested that any projects other than Dynamic Firewall related to the patents marked. Thus, the Court noted that it “need not indulge in unwarranted inferences”; rather, “it is beyond cavil that, when considered in context, the reference to ‘functioning’ relates to the progress of the project, not that the software was functioning or operating on the Website.” Id. at 10 (citation omitted).

The Federal Circuit also rejected Juniper’s other arguments. Specifically, with respect to the “affixing” or “advertising” prongs of § 292, even assuming that the facts rose to the level of an advertisement, the allegedly affixed marks related to Dynamic Firewall, not the website, software operating on the website, or pages generated by the website. Additionally, the Federal Circuit rejected Juniper’s argument that the district court improperly applied Fed. R. Civ. P. 12(b)(6): “the district court drew on its ‘judicial experience and common sense’ in identifying the unwarranted inference at the heart of Juniper’s claim.” Id. at 11 (citation omitted). Further, the district court’s dismissal without leave to amend was proper in this instance because the website excerpts were clear and unambiguous on their face, Juniper’s amended complaint “could not be saved by further amendment,” id. at 12, and the district court previously granted Juniper leave to amend and yet the amended complaint remained deficient. Finally, the Court rejected Shipley’s alternative argument that Juniper lacked standing to assert its false marking claim since the Federal Circuit had already rejected the same argument in Stauffer v. Brooks Brothers, Inc., 619 F.3d 1321, 1325 (Fed. Cir. 2010). “Because the United States suffers an injury when the false marking statute is violated, Juniper had standing to assert a qui tam claim against Shipley under 35 U.S.C. § 292.” Slip op. at 13.

Accordingly, the Federal Circuit affirmed the district court’s dismissal with prejudice.